Holistic support of efficiency and renewable projects in industry along all phases of project development and implementation

Panel: 3. Policy, finance and governance

This is a peer-reviewed paper.

Authors:
Jürgen Fluch, Borg & Co AB, Sweden
Winfried Braumann, Reenag GmbH, Austria
Jason Erwin, Borg & Co, Sweden

Abstract

Driven in part by the EU Taxonomy Regulation, momentum is growing amongst financial institutions, investors, and companies to direct capital and investments into climate mitigation activities. With a classification system to define environmentally sustainable activities, the logic is that climate mitigation activities including energy efficiency and renewable energy will receive favourable financing terms.

While an important foundation, achieving the desired speed and scale of capital-market based investment requires new models to address underlying project performance and credit risks. These risks are usually higher for small, SME-driven energy projects (efficiency and renewable supply) resulting in higher financing costs.

This paper proposes a single-point-of entry – the TrustEE platform – to address key challenges associated with scaling/securitizing “smaller” energy efficiency and renewable projects. Currently launched in Austria, the platform model includes the following attributes:

• Standard technical assessment procedures and contract vehicles to prepare energy efficiency and renewable projects for refinancing/securitization,

• Standard workflows and documentation to secure credit/performance guarantees,

• Third-party assessment/validation procedures to identify if energy efficiency/renewable heating investments align with or exceed the EU taxonomy criteria.

Momentum is also growing in the EU to establish public “climate guarantees”, both to increase access to financing for smaller SME-driven projects and to further reduce associated financing costs. The authors describe different options for structuring guarantees to protect financial investors against performance risks and credit risks. In conclusion, the paper offers an example of how the TrustEE platform integrates the technical, financial, and contractual requirements (including public guarantees) into the project assessment and project preparation workflow.

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